DP12286 Two Great Trade Collapses: The Interwar Period & Great Recession Compared

Author(s): Kevin Hjortshøj O'Rourke
Publication Date: September 2017
Keyword(s): Great Depression, great recession, protectionism, Trade collapse
JEL(s): F13, F14, N70
Programme Areas: International Trade and Regional Economics, Economic History
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12286

In this paper, I offer some preliminary comparisons between the trade collapses of the Great Depression and Great Recession. The commodity composition of the two trade collapses was quite similar, but the latter collapse was much sharper due to the spread of manufacturing across the globe during the intervening period. The increasing importance of manufacturing also meant that the trade collapse was more geographically balanced in the later episode. Protectionism was much more severe during the 1930s than after 2008, and in the UK case at least helped to skew the direction of trade away from multilateralism and towards Empire. This had dangerous political consequences.